Economic review

The IMF expects our economic growth rate to slow to just 0.6% this year. Sub Saharan Africa’s economic growth is projected at 3% for the year. The latter is a 15-year low. Quite interesting is the statement that oil-importing countries in Africa, excluding South Africa, is expected to grow at 5.2%. Those African countries exporting oil, have been hit hardest with their growth rate having halved. I assume this to be as a result of an over dependency on oil exports for revenue.

The Standard Bank Purchasing Managers’ Index has edged up to 47.9%, which is indicative of a continuing mild contraction in our economy. It is interesting to note that the Barclays equivalent rose to 54.9 last month. Au contraire, the latter improvement in growth is ascribed to the weaker Rand, import substitution and an improvement in domestic demand.

Business review

Acronyms: First came IQ, then came EQ; the latest is DQ. One’s digital quotient needs to be high in order to work in an environment pervasive with technology.

Reckless lending: Capitec has been hauled to court for alleged abuse of short-term credit facilities which it offers to customers. We have come to accept that one should not lend to those who cannot afford to borrow. It is a bit weird though that, when a person cannot repay, he can evade the responsibility to do so on the basis that the lender allowed him to overextend himself. Where is the personal responsibility? If this interests you, I have an article written by Renke on the regulations governing the assessment of affordability in terms of the National Credit Act. Ask me for a copy

A Frenchman is reported to be suing his former employer for forcing him to quit his job because the work was too boring. His “slow descent into hell” made him leave the firm and his employer clearly was entirely to blame for him not enjoying the job. Imagine if such a sentiment managed to migrate to Third World economies, where most jobs are not wildly exciting.

A breakthrough in the transportation of hydrogen – fuelled vehicles has been announced. The technology involves carrying the hydrogen in non-toxic and non-explosive fluid which also does not require compression.

An interesting issue that was raised as a result of a contempt of court order against Samwu in the Pikitup strike was whether such orders are a sufficient deterrent. The fine, in this case was R80k.

Property review

The FNB House Price Index came in at 6.4% yoy for April. Given that our inflation rate is in this same zone, our house price growth is, on average, practically zero.

Bruggemans published statistics on houses, greater than 80 m² and flats and town-houses which says that this grouping has effectively been moving sideways for some 8 years now, after having dropped 40% from its peak levels in 2007. Smaller houses have shown much greater growth. The slow growth in the former is attributed to tighter bank mortgage lending criteria.

It is reported that properties within closed residential areas account for 15% of the total overall market value of properties in South Africa. The finding that such properties are more expensive than others is, I would have thought, self-evident.

Another apparently self-evident matter, commented upon in this past week, was that low sectional title levies are not necessarily a good thing. One may not be aware thereof, but each sectional scheme is compelled to build up savings for future maintenance and the like. A buyer buys into this positive balance or, often, deficit. The latter is especially evident in very small schemes such as duplexes.

Human Settlements Minister Sisulu has announced a R350m mega-housing project in South African over the next few years – building approximately 1.5 million houses. The intent is to cut down on informal settlements. In this respect, the number of people living in informal settlements has been cut from 17% in 2002 to 11% in 2014.

Practice review

A challenge by the Free Market Foundation to extend collective bargaining agreements to non-parties has been dismissed by the High Court, Pretoria. The argument raised was that extending collective bargaining agreements to non-parties in wage negotiations was unconstitutional. The applicant has, however, claimed to be satisfied, given that one cannot in future assume that one can conclude deals behind closed doors without consideration for rival interest groups. Cosatu also claimed victory – probably more real. We should, as lawyers, sell this more. Clearly everyone was happy: our country is awash with such situations. Everyone claims victory after a battle!

I confess to being somewhat bemused by our prosecuting authority considering appealing against an order that it should reconsider prosecuting Mr Zuma. After all, it cannot be compelled to prosecute Mr Zuma. All it has to do is properly consider the facts and make a decision. The mere fact that a previous incumbent had been found to have been remiss in his duties, is really neither here nor there.

Cases and such

Repurchase agreement

Developers often include a clause in the contracts requiring purchasers to build on this 11 port with in a certain time. This is done to ensure that the development takes off and becomes viable. If this is not done the developer has the right to the purchase. I have not seen this case as I have been unable to access it. The reference is: Bondev v Ramokgopa ZAGPPHC [2015]

An interesting case was taken to the constitutional court in which the provincial government, North West Province, sought leave to appeal, which was refused. What I found interesting was the question whether funds belonging to the State in a bank account could be attached as opposed to movables. The issue was not decided but it is clear that the State’s reluctance to make good on a judgement given against it by a court, had disturbed the judge: the State merely argued that, in essence, it would have a recurring shortfall in the relevant vote and would not be able to pay the sum claimed for the foreseeable future. Clearly not okay.

Tsoga Developers Constitutional Court case CCT 91/15

Of late there has been much written in the news regarding State Owned Enterprises trading in insolvent circumstances. A relatively recent article on the subject may be of interest. It is written by Waine and is titled “The Insolvency Conundrum in the Companies Act.” Ask me for a copy.

Quotables

Conformity is the jailer of freedom and the enemy of growth. John F. Kennedy

Comment

Diversity: we have grown accustomed to ethnic diversity being seen as a civic strength; differences make us stronger? A new study by Harvard political scientist Robert Putnam, has concluded just the opposite.

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